York-based house builder Persimmon said its chairman Nicholas Wrigley will resign and remuneration committee chair Jonathan Davie has resigned amid a row over excessive executive pay at the firm.
Shareholders have expressed concern about Persimmon’s long-term incentive plan introduced in 2012, which could see the management share up to £600 million depending on profit and housebuilding targets — with CEO Jeff Fairburn in line for the biggest payout of more than £100 million.
“The company introduced a long term incentive plan in 2012 (2012 LTIP),” said Persimmon.
“The board believes that the introduction of the 2012 LTIP has been a significant factor in the company’s outstanding performance over this period, led by a strong and talented executive team.
“Nevertheless, Nicholas and Jonathan recognise that the 2012 LTIP could have included a cap.
“In recognition of this omission, they have therefore tendered their resignations.”
The UK Individual Shareholders Society (ShareSoc) tweeted: “We are delighted to see that Persimmon’s chair and remcom chair have stepped down and accepted responsibility for putting in place an LTIP scheme that resulted in £100m+ rewards going to Persimmon executives.
“ShareSoc warned about this in 2012, when the scheme was first proposed, but institutions were asleep at the wheel and waved it through.
“We shall continue to press for better corporate stewardship to prevent such abuses in future.”
Persimmon added: “Persimmon Plc announces that Nicholas Wrigley, chairman, has informed the board of his intention to resign.
“He will remain as chairman to allow an orderly process while the board seeks a successor.
“In addition, Jonathan Davie, senior independent director and chairman of the remuneration committee, resigned from the board on 14 December 2017 …
“The company will now look to appoint a new chairman and will report further in due course.
“In addition, the company announces that Nigel Mills has been appointed senior independent director with effect from 14 December 2017 and will lead the process of appointing a new chairman.
“Marion Sears has been appointed chairman of the remuneration committee, also from 14 December 2017.
“Since 2012, when the Capital Return Plan Strategy was launched and the 2012 LTIP was approved by shareholders, the company has made substantial cash returns to shareholders at the same time as increasing the size of the business and delivering significant shareholder value.
“Since the strategy was launched, Persimmon has delivered an increase in the number of new homes supplied of over 65%, invested £2.9 billion in new land, returned 485p per share (£1.5 billion) in cash and increased the proposed capital return by 49% to 925p per share, c. £2.85 billion.”